nuclear - All posts tagged nuclear

The earth gives and the earth takes away. While sales of high-end baubles mined from deep underground have helped profits at jeweler Tiffany, cheap natural gas mined from U.S. shale rock is forcing some American utilities to reset profit expectations.

Shares of large nuclear power operator Exelon (EXC) and another utility, FirstEnergy (FE), each have fallen more than 7% today. Shares of American Electric Power (AEP) are down 2.5%, while Duke Energy (DUK) shares only fell about 1%. As we noted this morning, some utilities have lacked discipline in building new capacity. That flood of power, priced with cheaper natural gas, means power price weakness. That’s good for the consumer, but is having a “crushing impact” on some operators, Credit Suisse writes.

Credit Suisse downgraded FirstEnergy to neutral from outperform because of an over-supplied power market. Deutsche Bank downgraded Exelon on Tuesday to hold from buy, saying revenue could weaken. Exelon announced a number of senior leadership changes, detailed in this press release.

Also in the news:

Shares of Valeant Pharmaceuticals International (VRX) have jumped more than 7% on the heels of another acquisition, this time of Bausch & Lomb, announced Friday and covered here.

Shares of Tiffany are up 3.7% to $79.01. Former Wall Street retail analyst Kristin Bentz offered a quick interview on Tiffany (TIF) with Bloomberg. She is executive director at PMG Venture Group, a private equity company focused on sports, media and luxury brands.

Bentz said high-margin statement jewelry pieces are selling, but the sterling silver jewelry business is soft. The company is revealing less about the Fifth Avenue store, which is 8% of sales globally. Overall, the U.S. is roughly 40% of sales and the company has been candid about weakness in the U.S. market. Silver jewelry has a lower price point and it provides an entrée to a Tiffany store for an aspirational buyer. But Tiffany can’t raise prices easily and silver prices are up in the past year. Bentz said Great Gatsby co-marketing is promising for Tiffany, and Japan is a bright spot in Asia shopping.

Cars may be lining up for gasoline following Hurricane Sandy, but the reality is that demand remains weak globally for energy, and that hurt earnings for oil-and-gas giant Exxon Mobil in the latest quarter.

Shares of Exxon Mobil (XOM) were up fractionally at midday to $91.34 after the integrated energy giant said profits and revenue declined due to lower production including weakness in the U.S. natural gas business. Other heavy weights: weak global energy demand and negative currency translation.

Exxon Mobil’s earnings report showed profit of $9.57 billion, or $2.09 a share, a 7.4% decline from operating earnings of $10.33 billion, or $2.13 a share, in the same quarter a year ago. Revenue fell 7.7% to $115.71 billion. The consensus among analysts was for profits of $1.95 a share on revenue of $112.4 billion, according to Thomson Reuters.

The early read from energy boutique Simmons & Co.: Upstream (exploration and production) performance “was materially weaker than expected with reported earnings coming in 16% below the consensus expectation” and “the lack of asset sales gains also made the year over year and quarter over quarter upstream profitability comparisons look worse than they are.” Says Simmons:

“Total production for XOM declined by 7.5% year over year, missing our expectation of a 5% decline by over 100,000 barrels of oil equivalent per day (boed) though we note ~30,000 boed of the miss was low-margin U.S. natural gas. Downstream results, on the other hand, were considerably stronger than expected, although the reported Q3 number was aided by asset sales gains (perhaps $360 million or 8 cents per share) though it is difficult to gauge the absolute impact of asset sales solely from disclosure provided in the earnings release. Chemicals performance was respectable but slightly weaker than we had expected.”

On the overall energy demand story, while Hurricane Sandy caused historic energy demand destruction, and gasoline futures spiked due to end-of-October contract expirations, other commodities are looking to upticks in China data on the hope of a commodity rally after “the worst monthly loss in five months,” reports Phil Flynn, a Chicago-based energy analyst at Price Futures Group, who adds:

“[Government reports show the] Chinese manufacturing index increased to 50.2 in October from 49.8 in September. HSBC mirrored that commodity bullish enthusiasm reporting their China PMI showing an increase from 47.9 in September to 49.5 in October which would be an eight month high. While copper and precious metals and grains may soar, the energies may lag as the magnitude of this storm and its epic demand destruction starts to sink in. Oil prices did see a pop on reports that 50% of the refining capacity in the Northeast is back on line. “

Flynn also notes that utility Excelon (EXC), whose shares are down 85 cents, or 2.4%, to $34.92 on a weak earnings report today, ended a rare alert issued at the oldest U.S. nuclear reactor still running, in New Jersey, due to storm surge. With so many power outages, wonder how many got those hurricane headlines. Writes Flynn:

“Exelon said Wednesday it ended an alert at the Oyster Creek nuclear power plant in New Jersey after high water from Hurricane Sandy returned to normal levels. Oyster Creek, the nation’s oldest operating reactor, declared the rare “alert” Monday night after water levels at the plant rose more than 6.5 feet above normal, potentially affecting the “water intake structure” that pumps cooling water through the plant. “

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